Offshore Users Resume Purchase for Japanese Steel Sheet

Japanese integrated steel makers seem to have increased steel sheet order receipts from overseas users since late July. Users seem increasing steel sheet procurement when Chinese market price hit bottom. However, overseas users’ offer price is FOB US$ 600-650 per tonne for hot coil and lower than Japanese steel makers’ selling price at around FOB US$ 700. Japanese integrated steels will enter export price negotiations for October-December shipment in late August. Japanese steel makers will be forced to balance sales volume and profitability.

Asian steel sheet market price weakened in May after Chinese market price downturned in late April. Steel inventory increased in China and Southeast Asia due to market slowdown and China’s export increase. Some reduced steel purchase volume and some passed orders for Japanese integrated steel makers for July-August shipment.

Recently inventory adjustment has progressed. Production of automobiles and appliances maintains high in Asia though the uptrend slowed down. One large dealer source said inventory adjustment has quickly advanced thanks to favorable actual demand but the problem is Chinese oversupply.

Japanese integrated steels’ raw material costs would lower in October-December. Iron ore spot price was recently US$ 130 per tonne in June and around US$ 110 in July. Quarterly iron ore price is likely to become lower than US$ 147 in July?September. Steel sheet market price would be impacted by raw material prices.